Vlasic files for Chapter 11

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After nearly four years of a mostly uphill fight to survive, Vlasic Foods, Cherry Hill, N.J., filed for Chapter 11 and sold off its roughly $300 million Vlasic pickles and Open Pit barbecue businesses to H.J. Heinz Co. for $195 million. Since its spin-off from Campbell Soup Co. in 1997, Vlasic has struggled to build its Vlasic and Open Pit businesses as well as its Swanson frozen business, which is yet to be sold, while under a mountain of debt. For Vlasic, which makes up 90 percent of the company's sales, operating profit dropped from $35.6 million in 1999 to $6.9 million in 2000, according to Credit Suisse First Boston analyst Dave Nelson. Mr. Nelson attributed the losses in part to a lack of advertising and new-product innovation. Billings for Vlasic at True North Communications' FCB Worldwide, New York, dropped from an estimated $10 million in 1999 to roughly $2 million in 2000. Collin Seely, account director for Vlasic at FCB, said that potential for the pickle brand at Heinz is great, since research shows it responds well to heavy advertising, especially focused around new-product innovation. The Vlasic account will likely move to Heinz roster shop, Bcom3's Leo Burnett. Open Pit has not had significant advertising spending in recent years.

Separately, Campbell Soup Co., newly under the direction of President-CEO Douglas Conant, announced plans to purchase a variety of European dry soup and sauce brands from Unilever for $950 million. Mr. Nelson said Heinz was also interested in these businesses, but not at the nearly $2 billion pricetag.

Copyright January 2001, Crain Communications Inc.

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